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Ahhh.... Contracts... Something I actually enjoy talking about. Why? Because it gets on my nerves just how many contracts are written with poor structure, or bad business language. Having wrote about a hundred of these things, I think I get the general gist of things regarding contract writing.

Before I start, in response to a comment, this advice comes from my knowledge of English law, so if you are outside of this jurisdiction and you doubt any of this advice, then don't use it. I have made some changes regarding particular sections, but most remain intact.

Headings
You'll be surprised how many contracts lack these... I'm going at a guess of 70% of contracts lack headings, which is really bad business practice. I'm going to reject any contract that lacks this, because I am not going to waste my time trying to find a specific term to prove a point in a contract dispute (in case it ever happens). Putting a title per section is not hard work, it takes 5 seconds to write one, and I'm surprised not many contracts do this.

Definitions
Another no-brainer, if you are going to write a contract like this for example:

  The Company must adhere to the below terms of agreement as written by the Contractor. All Productions must be produced and delivered to in some form to the Contractor. The Company will receive respective royalties until the end of the Product's Lifespan.
Who's the Company? Who's the Contractor? What are the Productions? What is the Product? How is "Lifespan" defined?

These are all very important aspects of a contract, without the definitions your contract is likely to be refused.

ADR - Alternative Dispute Resolution
In the UK, there is a thing called the ADR, which is basically a system that involves out-of-court discussions relating to legal disputes, in this order (from lowest to highest):
  1. Negotiation
  2. Mediation
  3. Conciliation
  4. Arbitration
  5. Tribunals

Some jurisdictions may have different systems.

It is important in a contract to put in some form of ADR, such as negotiation, which makes the contract look more friendly and pleasing to the recipient. This is commonly referred to in the "Termination of Contract" section, close to the end of the contract.

Introductions do not need titles
It is quite obvious where the introduction is going to be, so don't put a title for it - you look like a fool doing that. Here is an example paragraph of an introduction which is commonly used for most contracts:

The Contractor ("[contractor name]") agrees to bind the Company ("[company name]") for the purposes of producing a Product ("[product name]") that requires the Company to produce select Materials for said Product. The Company, by signing at the end of this Contract, agrees to be bound by the terms of this Contract. By producing the Materials, the Company agrees that the Contractor, for the purposes of this Contract, will use said Materials for use in the Product under terms of this Contract.

The terms of this Contract may change from time to time, and the Contractor in this instance agrees to send the amended draft to any and all first parties related to this Contract for re-approval.

It is important to make clear any drafts of a contract. It is also good practice to write any amendments in an Appendix (after the signatures).

Referring to Amendments
If you have version 1 to version 27, there is going to be a lot of amendments. All copies of all versions of your contract must remain intact, and any amendments be made in a different document.

"Battle of the Forms" as it is known in UK law is based on the battle between standard form contracts (kindly corrected by Valar Morghulis).

By having each copy of different versions of a contract is good legal practice to have.

Number terms
Unless it is a title, sub-heading, the Introduction, metadata or signatures, you should put numbers for each term to make it easy to read, using proper indents and justifying the text.

Structure and Layout
Some standard form contracts have no boldness in Titles or Headings, and hardly any structure, layout or good presentation. This is the reason why hardly anyone reads a legal document, not alone a lawyer, because it's poorly structured most of the time.

Terms need to be to the point and describe exactly what I CAN and CANNOT do, what rights I reserve and what royalties I will get, end of. Any consequences to these terms should be written at the end of the contract, notably in a "Termination of Contract".

It can be often, particularly in American law, where some terms of legislation are so confusing and make no sense whatsoever. Avoid complex paragraphs and make sure you understand it; because if you can't, neither will the reader.

Conclusion
If you want to be a businessman, you need to know how to read and write a contract, and be able to understand business language, and this is why I feel any and all businesses should be run by Corporate citizens that have a diploma or degree in some form of Business subject, otherwise you end up with idiots writing bad policies and contracts that are poorly written.

You can probably say that to a few companies and they won't understand what this means... If you are going to own a business, just don't get yourself into trouble with badly spelt (not the American English definition) Contracts. That's all I'm going to say.

I hope this serves the legal world well, and thank you anyone for participating (if that's the right word to use).

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Comment Preferences

  •  While the information is important to (0+ / 0-)

    know for individuals who use contracts through self-employment or getting a project completed, i think your good efforts and intentions are undermined by the tone.  It seems to suggest the author is berating people rather than providing assistance.  If the tone chose to illuminate rather than berate my guess would be that you would engender a more productive discussion.  Just sayin'....

    Every time history repeats itself, the price goes up...East Wing Rules

    by Pithy Cherub on Sun Aug 04, 2013 at 09:34:24 AM PDT

    •  Most of it is rather obvious (0+ / 0-)

      And then other points not so much. I tend to steer from a professional, neutral stand-point, to more trash-talk and then back again. It makes the article more interesting to read :) A bit of humour is good, obviously overdoing it is not good at all.

      That's if you know British humour, and I honestly don't blame you if you don't.

  •  good fences make good neighbor (0+ / 0-)

    And a verbal contract is not worth the paper its written on

    Happy just to be alive

    by exlrrp on Sun Aug 04, 2013 at 10:22:24 AM PDT

  •  Most people don't deal with contracts (0+ / 0-)

    very often.  A well written contract answers who is going to do what, when, and how.  It's that simple, and if it isn't in the contract don't expect it.  A true contract also generally requires something to change hands at the time of signing..usually some amount of money...to be binding.

    Anyone who signs a contract either needs to be knowledgable on the subject of the contract, else important details may be omitted to the detriment of one party or the other....or hire an expert to assist in evaluating the contract.

    Oil and gas leases are very different from consumer finance documents, for example.  I think you've stressed contract structure over content...and it doesn't matter how it looks or is organized if it ultimately doesn't address the critical issues.

    The darkest places in hell are reserved for those who maintain their neutrality in times of moral crisis. - Dante Alighieri

    by Persiflage on Sun Aug 04, 2013 at 02:20:30 PM PDT

  •  Arbitration clauses are seriously abused, in US, (0+ / 0-)

    especially by the credit card banksters.

    •  Sorry to hear that (1+ / 0-)
      Recommended by:
      gfv6800

      In the UK, Tribunals is used mainly for business-oriented disputes, and from what I know it is rather clean system, and is often used more so than Arbritration, although Tribunals is a bit more costly.

      As with most forms of ADR, and esp. Arbritation, it is mostly cheaper than going to court over a dispute.

  •  Take caution in using this advice. (2+ / 0-)
    Recommended by:
    serendipityisabitch, mskitty
    Writing what you amended from the previous contract in the current version is vital and exceptionally aids the recipient in finding the changes and being able to agree with them accordingly.
    For the vast majority of cases, this is bad advice.

    Avoiding ambiguity and confusion is perhaps the single most important aspect of contract drafting. Including language which references a term that is NOT an agreed upon term of the contract is the opposite of that. That's why so few contracts do this.

    "Battle of the Forms".
    Battle of forms is not about contract negotiations. It refers to the conflict that arises when companies use conflicting standard form contracts for offer and acceptance. Much different.
    "Battle of the Forms" as it is known in UK law, until both parties agree on a version of a contract that works best for both.
    Until both agree on a version that works best for both? Why would there be a conflict to begin with if that possibility existed?
    People want to know where things are and what terms they need to be considering, they do not want to know, for example, how you influence or judge other people based on their violations to such terms.
    Oh my God. Is this a joke? Headers and paragraph numbering are more important than knowing the consequences of breach?

    People just don't want to know about what happens if they break the agreement?

    Look, you MUST stop giving legal advice in diaries, and everywhere else for that matter.  I don't normally speak up about these things, but I read your diary "Threats are not crimes" and you did it there as well.

    On some points you're just flat out wrong, and on others the advice is questionable at best. These matters that seem so simple and obvious to you are just not as clear cut as you think.

    It's one thing to write about your experiences with the law. I encourage that. But presenting it as legal advice ("How to...") is dangerous. Please stop doing this.

    Source: I'm a lawyer

    •  Ditto. IAAL. He may be a solicitor. Maybe. (0+ / 0-)

      But good heavens, he can't write - he doesn't misspell but his proofreading doesn't catch errors in grammar, verb case, or missing words, and if he can't hold an entire phrase in his mind at one time, how could he possibly keep all the terms of a business contract correlated in his mind long enough to write an internally consistent enforceable contract?

      •  My impression is that he's being sincere (0+ / 0-)

        and just wants to engage others on topics in which he is interested. Business and law are decidedly political topics, so I don't disagree with the idea of it, but I think he's going about it the wrong way.

        Fortunately, with a few exceptions here and there, contract law is pretty well settled and fairly consistent across jurisdictions. That means there are a lot of example materials available, so if he needs to write one, help is there.

        As far as grammar, etc., I can actually forgive those mistakes pretty easily if the content is good. If I'm engaged in something good, I almost don't even notice it.

        •  I didn't go to college for nothing (0+ / 0-)

          At college I recently did my exams in a Level 3 Certificate for Law & Practice (English Law) and I am in the process of completing a two-year vocational degree in Business, which is a BTEC Level 5, so I would understand if you believe otherwise.

          If you think Contract law is consistent between Jurisdictions, well... to some extent, yes. When I was looking at standard form contracts that I was going to consider when signing to Versilian Studios (music production), the founder gave me three, and neither of them I actually enjoyed reading, and most of the time I actually do enjoy reading legal documents.

          Obviously if any document is not well structured, I'm not going to read it. The first standard form contract in particular had no text justified, it didn't use the number system Microsoft Word uses, and there were no Headings between certain sections which made all the terms all jumbled up.

          Take a look at Terms of Service, which is pretty much on any website, and is effectively a contract you virtually sign when visiting any website, and tell me that is poorly structured just because there are Headings in the way; personally I find that to be good practice.

          UK Legislation has specific standards when that is written: http://www.legislation.gov.uk/

          Take a look at any law and tell me that is poorly structured... Because most of my advice comes from reading these laws, not writing them. While it is not in the scope of a contract, I would have thought almost every legal document must be structured with that same kind of consistency to make such legal documents easy to read.

          As you said

          contract law is pretty well settled and fairly consistent across jurisdictions.

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